Oil Traders Warn: Worst Demand Destruction Still Ahead

Key Details Top oil traders are sounding the alarm that demand destruction from the Iran conflict has only just begun. Gunvor Group expects lost consumption to double to 5 million barrels daily next month - roughly 5% of global supplies. Vitol Group CEO Russell Hardy reports current losses at 4 million barrels per day, with expectations for further increases as the crisis persists. Why It Matters A prolonged closure of the Strait of Hormuz could trigger a global recession, according to major trading firms. While physical cargo costs for jet fuel and diesel have surged, futures benchmarks remain relatively subdued, suggesting markets are underestimating the true supply loss. The International Energy Agency reports Persian Gulf supplies have already dropped 13 million barrels daily since late February. Spread Beyond Energy The impact extends far beyond oil prices. Petrochemical producers across China, Japan, and South Korea have scaled back operations. Airlines from Vietnam to the Netherlands are canceling flights or preparing contingency plans. Southeast Asian farmers face idle rice fields as fuel and fertilizer costs climb dramatically. The Path Forward Traders emphasize we're at a critical inflection point. Crude futures have rallied 30% since the war began, though current trading hovers near $95 per barrel. Diplomatic resolution could prevent the worst-case scenario, but continued conflict means someone must do without - contracting economic activity across industries.